This Monday (16th) is the deadline for taxpayers to update the value of the property in their Income Tax (IR) declaration in exchange for immediate payment of the tax at reduced rates. Authorized by Law 14,973which established the gradual repayment of the payroll until 2027, the benefit allows the payment of IR in advance at a discount to reinforce the government’s cash flow.
The updated values have been in effect since September 24, when the Federal Revenue Service published the normative instruction which regulates the possibility. The measure will help the government cover the impact of the extension of tax relief in the coming years, but the government did not provide estimates of how much it should collect with the advance of IR.
Until now, the legislation did not allow updating the purchase value of properties in the Income Tax declaration, except in cases of duly proven renovation and expansion. The new law allows the value to be updated in the declaration, collecting tax on the gain in value in advance, at reduced rates.
The measure benefits both individuals and companies, but is only advantageous for those who intend to sell the property in the medium and long term. For individuals, a 4% Income Tax rate will be applied to the difference between the purchase price of the property and the updated value. Companies will pay 6% Corporate Income Tax (IRPJ) and 4% Social Contribution on Net Profit (CSLL).
Currently, individuals pay between 15% and 22.5% Income Tax on capital gains (the appreciation of the asset over time) when the property is sold. Legal entities generally pay 15% IRPJ and 9% CSLL, totaling 24%, but the sum of the two taxes can reach 34%, depending on the company’s taxation regime.
Deduction
The rates charged on the sale of the property have not changed. However, the IRS will allow anyone who updated the value of the property in the declaration to deduct, from the calculation basis, the difference between the updated amount and the amount before the update. This results in the payment of less taxes for those who took advantage of the benefit.
Anyone who sells the property within three years of updating will not be able to deduct anything. From the fourth year onwards, the portion to be discounted increases eight percentage points per year on the value of the difference – between the updated value and before the update – until it reaches 100% after 15 years. Only from the 16th year onwards will the deduction be total. In practice, the benefit will only be useful for those who change property after the ninth or tenth year after the update.
Procedure
Those interested in updating the value of the property in the declaration must present the Declaration of Option for Update of Real Estate Assets (Dabim). The document is available from this Tuesday at the Virtual Service Center (e-CAC) of Federal Revenue.
The 2025 Budget bill, sent to Congress at the end of August, does not predict how much the government can raise through advance taxes. According to the government, it was not possible to make the calculations because the impact on federal coffers would depend on the speed of the economic team in regulating the measure.
